1. Field of the Invention
This invention relates generally to data authentication, and, more particularly, to systems and methods for authentication of financial instruments.
2. Description of the Related Art
Checks continue to be a popular medium of financial exchange. Many individuals who are issued checks from second parties, such as paychecks from their employers, prefer to cash the checks rather than to deposit them in a bank account before withdrawing the funds. For example, many people prefer to cash their paychecks at a grocery store or check-cashing establishment. Furthermore, individuals who do not have bank accounts in which to deposit checks often depend on cashing their paychecks, government checks, and other checks at such establishments.
Businesses that cash checks for their customers take a risk that if they agree to cash a given check, they may be unsuccessful themselves in attempting to settle the check with the issuing bank. Forged checks, stolen checks, checks that have been fraudulently altered, and checks written on accounts with insufficient funds or on accounts that have been closed all contribute to losses sustained by entities that agree to accept checks for cashing. Some check-cashing entities now charge increased fees for their check-cashing services in order to compensate for losses due to the acceptance of fraudulent checks.
A check that is written by one party for cashing by another party is often known as a “second-party check.” For example, a payroll check issued by an employer to an employee and presented by the employee for cashing at a grocery store may be classified as a second-party check. Businesses that cash second-party checks face extra difficulties in determining whether to accept a check presented to them for cashing because, in addition to assessing the identity and trustworthiness of the check presenter, they would like to be assured that the issuer of the check, who is typically not present, is in fact willing to authorize payment of the check.
Positive pay information is information compiled by a check-issuer about checks that the check-issuer has written against the funds in an account, often comprising information about a check number, issue date, payee name, and amount associated with a check. Thus, positive pay information is similar in many respects to information that an individual may record in his or her checkbook register about checks that have been written.
Some check-issuers, especially those writing many checks, such as large employers and businesses, may make a copy of their positive pay information available to the bank that holds their check account, with the agreement that the bank is not authorized to release funds from their check account other than for payment of those checks listed on the provided positive pay file. When a check is presented to the bank for cashing, comparing information from the face of the check with information in the positive pay file helps the bank to avoid withdrawing funds from the check-issuer's account for the payment of fraudulent checks. For this and other reasons, the use of positive pay information has proven very beneficial to banks and to check-issuers.
Check-cashing entities that cash negotiable instruments of various types, such as second-party checks, may also benefit from access to positive pay information for checks that have been presented to them for cashing. Accessing a positive pay file associated with a second-party check that has been presented for cashing is one method for checking on the authenticity of the check before making a decision to accept the check for cashing. Finding a record in the positive pay file indicating that information from the presented check matches a check listing that is authorized by the check-issuer may serve to increase confidence in the legitimacy and “cashability” of the check. Finding a record in the positive pay file indicating that the same check has already been paid may serve to increase suspicion in the fraudulent nature of the check and may decrease confidence in the “cashability” of the check. Thus, access to relevant positive pay information may help check-cashing entities more accurately assess the risk of proposed check-cashing transactions.
However, while a bank may relatively easily access positive pay information for checks from a given account before disbursing funds from that account because the desired positive pay information is typically in the bank's own possession, check-cashing entities that wish to use positive pay information to help them assess risk associated with proposed check-cashing transactions rely on positive pay information from a wide variety of check issuers, either directly or via a third-party.
Accessing information from a variety positive pay information sources may be associated with a variety of differing costs in terms of time, money, computer resources, and the like. Furthermore, various positive pay information sources may provide positive pay data that differs in the degree to which it is kept up-to-date.
At the same time, various check-cashing entities may have differing business preferences and priorities. For example, check-cashing entities may differ with respect to the level of confidence that they desire in the degree to which accessed positive pay information is up-to-date. Check-cashing entities may differ in the amount of resources that they are willing to expend for positive pay information associated with a desired level of confidence. Furthermore, a given check-cashing entity may desire a higher level of confidence in positive pay information for a high dollar-value check issued by an unfamiliar check-issuer than it would for a lower dollar-value check issued by a local employer and presented for cashing each payday.
For some presented checks, it may be easy to identify and to access a single positive pay information source that stores the desired positive pay information. When no single, definitive source of positive pay information for a presented check is known, the check-cashing entity, or the third-party check authentication service working on its behalf, may be configured to access and to query a plurality of positive pay information sources in a search for the desired positive pay information.
While an exhaustive querying of available positive pay information sources may provide a comprehensive survey of available information and a high level of confidence in the completeness of the information obtained, given a large number of information sources and the possible existence of constraints on time or other resources for carrying out a set of queries, an exhaustive search of available positive pay information sources may consume an amount of system resources that is unwarranted and undesired by the check-cashing entity. At the same time, a search limited to only one or a few of the available positive pay information sources may fail to locate existing, desired positive pay information for the check in question that may have been located if the search had been extended even a little.